5 Little-Known Facts About Credit Cards
Credit cards symbolize different things to different people. They can be a gateway to extreme shopaholism, a tool for functioning day-to-day without needing to carry significant cash, or a way of getting by when money is tight.
Almost every household relies on credit cards to some degree, in some form. We all know "credit card" is a loaded word -- the worst of which means debt. However, with all we know about credit cards, could there be things we don't know?
Yes! Here are five important things you probably didn't know about credit cards.
1. The card you never heard of
Many people abuse their credit cards and end up with a pile of debt so high, it feels like they'll never be debt-free again. If this is you, did you know that the best payment option to consolidate that debt and escape insane interest might be to open a balance transfer card?
A balance transfer card allows credit card users to move all their balances onto one card with an APR of 0 percent for 12 months, 15 months, or 18 months. This means you get a "Get out of jail free" card, and can begin chipping away at your debt without accruing daunting interest.
But beware -- many times, the APR doesn't apply to new purchases, and all new purchases accrue at a much higher rate. Your balance will also switch to that rate when the introductory offer is over. In many cases, this interest can be as high as 29.99 percent. Luckily, we've compiled a list of the best balance transfer cards, and many of them offer 0 percent APR on new purchases as well (for a period of time).
2. The merchant bullying tactic at the register
We've all been there -- you're at the register, and the cashier looks you dead in the eye and without missing a beat, coolly asks for your ID when you try to pay with your card. Well, guess what? You don't have to!
Visa and MasterCard prohibit merchants from requiring an ID to accept a signed credit card.
According to Visa: "Although Visa rules do not preclude merchants from asking for cardholder ID, merchants cannot make an ID a condition of acceptance. Therefore, merchants cannot refuse to complete a purchase transaction because a cardholder refuses to provide ID. Visa believes merchants should not ask for ID as part of their regular card accepting procedures."
However, if your credit card isn't signed, the merchant does have the right to ask for your ID and for you to sign your card in order to accept it as payment.
3. Bogus chargeback restrictions
A chargeback is a return of a consumer's money by a merchant, a move forcibly initiated by the issuing bank of the tool (credit card, debit card, etc.) to settle a debt. Essentially, in the United States, consumers are given a lot of rights, and can have their issuer initiate a chargeback based on a few circumstances:
- the customer claims to never have received the items as promised when purchasing
- the consumer claims they did not authorize the purchase or that there was a case of identity theft
- the merchant billed the consumer incorrectly, didn't issue a refund that was supposed to take place, or billed duplicates
- there was a bank processing error, insufficient funds, or an expired authorization
Some merchants issue receipts that state you've agreed to give up your chargeback rights against that merchant for any reason, ever. Receipts that make these claims are bogus, and merchants can be reported for such practices.
4. Closing your account
Closing an old credit card account could hurt your credit score, but depending on your existing debt and credit card limits it might not. Here's why.
5. Using a credit card will give you a ton of benefits and protection on your purchases
According to Ramit Sethi, author of "I will Teach You to Be Rich" and interviewee for MyBankTracker, credit card programs come with all sorts of benefits, which are available to every consumer, but you must ask for them.
For example, you automatically get an extended warranty up to one year for purchases, which he points out means, buying extra warranties at Best Buy are a rip off. Also, you most likely get automatic car rental and collision insurance as well, and maybe even trip-cancellation insurance. Check with your card issuers to be sure!
The kinds of buying privileges credit cards allow consumers to access are great, but consumers must be vigilant about checking whether retailers are strong-arming them into financial behavior that favors them. However, credit cards are truly a tool for the consumer, and consumers are encouraged to tap into their credit card's portal, and access rewards they may not have known about until now.
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